Stalled job markets

Failure by many European Union member states to implement the 2008 agency work directive not only flouts EU regulation but is also failing Europe’s unemployed, who stand to benefit from the opening up of labour markets.

When policymakers rubber-stamped the directive, there was general consensus that its implementation would promote a balanced approach by stimulating job creation while providing adequate protection for agency workers. However, one year on from the final deadline for implementation, it appears that transposition at national level has been patchy and unjustified restrictions on temporary agency work still exist in many markets.

The directive aims to ensure that temporary agency workers receive pay equal to permanent workers. The good news is that all member states have now transposed this element or agreed terms for derogation with social partners in order to balance the interests of employers and workers.

However, the legislation also requires the review and removal of unjustified restrictions that stifle temporary work agencies and prevent them from creating jobs. Several countries are lagging behind here, with unjustified restrictions still in place, particularly in Belgium, France, Luxembourg, Italy, Portugal, Spain and Sweden. Examples include quotas on the maximum number of agency workers, inadequate maximum lengths of assignments, or restrictions on the kinds of labour contracts that can be offered to agency workers. Eurociett has raised the issue with policymakers on numerous occasions, and our Swedish member, Bemanningsföretagen, has made several complaints to the Commission to challenge its government’s interpretation of the directive.

Today’s well-functioning labour markets operate with many different forms of employment contract. France and Belgium have more than 30, reflecting the growing demand for flexibility and work/life balance among workers and the need of today’s business environment to adopt flexible labour solutions.

Contract restrictions

In July, for the first time, the Organisation for Economic Co-operation and Development’s ‘employment outlook 2013’ included an employment protection legislation index for temporary agency work and fixed-term contracts. It confirmed that fixed-term contracts are subject to fewer restrictions, with the result that they have exploded in recent decades (now at 14% of the workforce). Temporary agency work, which can actually provide workers with a stepping-stone to permanent work, lags significantly behind (at 1.6%), because it is far more strictly regulated. This simply exacerbates the segmented labour markets we see in countries such as Spain, where some workers enjoy highly secure contracts at the expense of others who have no security at all. These findings are also borne out in the European Commission’s employment package, which acknowledges that efficient labour markets actually drive growth.

We all know the statistics: there are 26 million people looking for work in the EU today, 5.5m of them are under 25 years old. But there are also over 2m unfilled vacancies. In order to match supply with demand in the workplace and to provide hope to unemployed young people, we need intermediaries with the expertise to find the right fit for job-seekers and organisations. Agency work has a role to play here and has a clear advantage over fixed-term contracts in facilitating access to employment and reducing labour-market segmentation.

If governments want to stimulate growth and create jobs, then they need to rebalance their regulation and fully transpose the agency work directive. Failure to do so is denying Europe’s unemployed the chance of a job and stalling the opportunity for Europe’s labour markets to become more competitive and efficient.

Denis Pennel is the managing director of Eurociett, which represents the private employment services industry.